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TriCo Bancshares Announces Annual and Quarterly Results

CHICO, Calif., January 25, 2022--(BUSINESS WIRE)--TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company of Tri Counties Bank, today announced net income of $28,222,000 for the quarter ended December 31, 2021, compared to $27,422,000 during the trailing quarter ended September 30, 2021 and $23,657,000 during the quarter ended December 31, 2020. Diluted earnings per share were $0.94 for the fourth quarter of 2021, compared to $0.92 for the third quarter of 2021 and $0.79 for the fourth quarter of 2020.

Financial Highlights

Performance highlights and other developments for the Company as of or for the three and twelve months ended December 31, 2021 included the following:

  • For the three and twelve months ended December 31, 2021, the Company’s return on average assets was 1.31% and 1.43%, respectively, and the return on average equity was 11.20% and 12.10%, respectively.

  • Loan growth, excluding PPP, totaled $119.4 million (10.1% annualized) for the current quarter and $419.1 million (9.4% annualized) for the trailing twelve-month period.

  • For the current quarter, net interest margin on a tax equivalent basis was 3.50%, which was consistent with the 3.50% in the trailing quarter and 3.79% for the quarter ended December 31, 2020.

  • The efficiency ratio improved to 53.18% for the twelve months ended December 31, 2021, as compared to 58.40% for the same period of the prior year.

  • As of December 31, 2021, the Company reported total loans, total assets and total deposits of $4.92 billion, $8.61 billion and $7.37 billion, respectively. As a direct result of significant deposit growth in the last year, the loan to deposit ratio has declined to 66.74% as of December 31, 2021, as compared to 73.21% at December 31, 2020.

  • The average rate of interest paid on deposits, including non-interest-bearing deposits, equaled 0.04% during the fourth quarter of 2021, comparing favorably with 0.05% during the trailing quarter, and representing a decrease of 3 basis points from the average rate paid of 0.07% during the same quarter of the prior year.

  • The balance of PPP loans outstanding at December 31, 2021 totaled $63.3 million and the balance of SBA fees remaining to be accreted totaled $2.2 million. Over 90% of all PPP loans originated have been forgiven and repaid by the SBA.

  • Noninterest income related to service charges and fees was $11.3 million and $43.9 million for the three and twelve month periods ended December 31, 2021, an increase of 10.4% and 15.7% when compared to the same periods in 2020.

  • The provision for credit losses for loans and debt securities was approximately $1.0 million during the quarter ended December 31, 2021, as compared to a reversal of provision expense of $1.4 million during the trailing quarter ended September 30, 2021, and a provision expense totaling $4.9 million for the three month period ended December 31, 2020.

  • The allowance for credit losses to total loans was 1.74% as of December 31, 2021, compared to 1.72% as of the trailing quarter end, and 1.93% as of December 31, 2020. Non-performing assets to total assets were 0.38% at December 31, 2021, as compared to 0.37% as of September 30, 2021, and 0.39% at December 31, 2020.

"Fourth Quarter operating results remained strong as net loan growth, excluding PPP, exceeded 10 percent during the quarter. In addition, the performance of our Southern California commercial banking centers that opened in the Summer of 2021 are exceeding our internal forecasts," commented Rick Smith, President and Chief Executive Officer. Smith added, "We also expect our acquisition of Valley Republic Bank to close in the first quarter of 2022. The Valley Team continues to build loan pipelines and their loan growth remains strong."

Peter Wiese, EVP and Chief Financial Officer also commented, "2021 represented the first year in our history where annual net income exceeded $100 million and total shareholders’ equity grew to over $1.0 billion. We thank our pandemic-weary Team for all of their hard work and efforts over the past year."

Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the period ended December 31, 2021, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Summary Results

For the three and twelve months ended December 31, 2021, the Company’s return on average assets was 1.31% and 1.43%, respectively, while the return on average equity was 11.20% and 12.10%, respectively. For the three and twelve months ended December 31, 2020, the Company’s return on average assets was 1.24% and 0.91%, respectively, while the return on average equity was 10.37% and 7.18%, respectively.

The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:

Three months ended

December 31,

September 30,

(dollars and shares in thousands)

2021

2021

$ Change

% Change

Net interest income

$

69,783

$

68,233

$

1,550

2.3

%

(Provision for) reversal of credit losses

(980

)

1,435

(2,415

)

(168.3

) %

Noninterest income

16,502

15,095

1,407

9.3

%

Noninterest expense

(46,679

)

(45,807

)

(872

)

1.9

%

Provision for income taxes

(10,404

)

(11,534

)

1,130

(9.8

) %

Net income

$

28,222

$

27,422

$

800

2.9

%

Diluted earnings per share

$

0.94

$

0.92

$

0.02

2.2

%

Dividends per share

$

0.25

$

0.25

$

%

Average common shares

29,724

29,714

10

%

Average diluted common shares

29,870

29,851

19

0.1

%

Return on average total assets

1.31

%

1.30

%

Return on average equity

11.20

%

11.02

%

Efficiency ratio

54.10

%

54.97

%

Three months ended
December 31,

(dollars and shares in thousands)

2021

2020

$ Change

% Change

Net interest income

$

69,783

$

66,422

$

3,361

5.1

%

Reversal of credit losses

(980

)

(4,850

)

3,870

(79.8

) %

Noninterest income

16,502

16,580

(78

)

(0.5

) %

Noninterest expense

(46,679

)

(45,745

)

(934

)

2.0

%

Provision for income taxes

(10,404

)

(8,750

)

(1,654

)

18.9

%

Net income

$

28,222

$

23,657

$

4,565

19.3

%

Diluted earnings per share

$

0.94

$

0.79

$

0.15

19.0

%

Dividends per share

$

0.25

$

0.22

$

0.03

13.6

%

Average common shares

29,724

29,757

(33

)

(0.1

) %

Average diluted common shares

29,870

29,863

7

%

Return on average total assets

1.31

%

1.24

%

Return on average equity

11.20

%

10.37

%

Efficiency ratio

54.10

%

55.11

%

Twelve months ended
December 31,

(dollars and shares in thousands)

2021

2020

$ Change

% Change

Net interest income

$

271,539

$

257,727

$

13,812

5.4

%

Reversal of (provision for) credit losses

6,775

(42,813

)

49,588

(115.8

) %

Noninterest income

63,664

55,194

8,470

15.3

%

Noninterest expense

(178,275

)

(182,758

)

4,483

(2.5

) %

Provision for income taxes

(46,048

)

(22,536

)

(23,512

)

104.3

%

Net income

$

117,655

$

64,814

$

52,841

81.5

%

Diluted earnings per share

$

3.94

$

2.16

$

1.78

82.4

%

Dividends per share

$

1.00

$

0.88

$

0.12

13.6

%

Average common shares

29,721

29,917

(196

)

(0.7

) %

Average diluted common shares

29,882

30,028

(146

)

(0.5

) %

Return on average total assets

1.43

%

0.91

%

Return on average equity

12.10

%

7.18

%

Efficiency ratio

53.18

%

58.40

%

SBA Paycheck Protection Program

In March 2020 (Round 1) and subsequently in December 2020 (Round 2), the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis. Tri Counties Bank, through its online portal, facilitated the ability for borrowers to open a new deposit account and submit PPP applications during the entirety of the Programs. The SBA ended PPP and did not accept new borrowing applications, effective May 31, 2021.

The following is a summary of PPP loan related information as of the periods indicated:

(dollars in thousands)

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Total number of PPP loans outstanding

450

1,449

2,209

2,484

2,310

PPP loan balance (Round 1 origination), gross

$

2,544

$

9,302

$

51,547

$

193,958

$

333,982

PPP loan balance (Round 2 origination), gross

60,767

148,159

197,035

176,316

n/a

Total PPP loans, gross outstanding

$

63,311

$

157,461

$

248,582

$

370,274

$

333,982

PPP deferred loan fees (Round 1 origination)

$

1

$

40

$

477

$

2,358

$

7,212

PPP deferred loan fees (Round 2 origination)

2,163

5,973

8,513

7,072

n/a

Total PPP deferred loan fees outstanding

$

2,164

$

6,013

$

8,990

$

9,430

$

7,212

As of December 31, 2021, the total gross balance outstanding of PPP loans was $63,311,000 as compared to total PPP originations of $640,410,000. In connection with the origination of these loans, the Company earned approximately $25,299,000 in loan fees, offset by deferred loan costs of approximately $1,245,000, the net of which will be recognized over the earlier of loan maturity (between 24-60 months), repayment or receipt of forgiveness confirmation. As of December 31, 2021, there was approximately $2,164,000 in net deferred fee income remaining to be recognized. During the three and twelve months ended December 31, 2021, the Company recognized $3,842,000 and $14,148,000, respectively in fees on PPP loans as compared with $4,643,000 and $7,760,000 for the three and twelve months ended December 31, 2020, respectively.

COVID Deferrals

Following the passage of the CARES Act legislation, the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus" was issued by federal bank regulators, which offers temporary relief from troubled debt restructuring accounting for loan payment deferrals for certain customers whose businesses are experiencing economic hardship due to Coronavirus. The applicable period for this relief, originally expected to expire on December 31, 2020, was extended through 2021 by way of the Consolidated Appropriations Act.

The following is a summary of COVID related loan customer modifications with outstanding balances as of December 31, 2021:

Modification Type

Deferral Term

(dollars in thousands)

Modified Loan Balances
Outstanding

% of Total
Category of Loans

Interest Only Deferral

Principal and
Interest Deferral

90 Days

180 Days

Other

Commercial real estate:

CRE non-owner occupied

$

18,437

1.2

%

100.0

%

%

%

79.5

%

20.5

%

CRE owner occupied

Multifamily

Farmland

Total commercial real estate loans

18,437

0.6

79.5

20.5

Consumer loans

Commercial and industrial

Construction

Agriculture production

Leases

Total modifications

$

18,437

0.4

%

100.0

%

%

%

79.5

%

20.5

%

The remaining balance outstanding as of December 31, 2021 are expected to conclude their modification period during the first half of 2022. The COVID deferral relief period under the CARES act legislation ended effective January 1, 2022, as such, any further requests for modification from borrowers will be evaluated in accordance with loan modification accounting guidance.

Balance Sheet

Total loans outstanding, excluding PPP, grew to $4.86 billion as of December 31, 2021, an increase of 9.4% over the prior year, and an annualized increase of 10.1% over the trailing quarter. Investments increased to $2.43 billion as of December 31, 2021, an increase of 16.3% annualized over the trailing quarter. Average earning assets to total average assets continued to increase to 93.0% at December 31, 2021, as compared to 92.9% and 92.4% at September 30, 2021, and December 31, 2020, respectively. The loan to deposit ratio was 66.7% at December 31, 2021, as compared to 67.5% and 73.2% at September 30, 2021, and December 31, 2020, respectively.

Total shareholders' equity increased by $18,170,000 during the quarter ended December 31, 2021, primarily as a result of net income of $28,222,000, offset by a decrease in accumulated other comprehensive income of $2,746,000, and $7,433,000 in cash dividends paid on common stock. As a result, the Company’s book value increased to $33.64 per share at December 31, 2021 as compared to $33.05 and $31.12 at September 30, 2021, and December 31, 2020, respectively. The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $25.80 per share at December 31, 2021, as compared to $25.16 and $23.09 at September 30, 2021, and December 31, 2020, respectively.

Trailing Quarter Balance Sheet Change

Ending balances

As of December 31,

September 30,

$ Change

(dollars in thousands)

2021

2021

Total assets

$

8,614,787

$

8,458,030

$

156,757

7.4

%

Total loans

4,916,624

4,887,496

29,128

2.4

%

Total loans, excluding PPP

...